POEconomics Chapter 1

What is the definition of economics?

• The study of how people use their limited resources to fulfill unlimited wants

• The study of how people waste their resources

• The study of how people use their unlimited resources

• The study of how people save their resources for the future

Which of the following is a characteristic of microeconomics?

• Focus on individual parts of the economy

• Control of monopolies

• Study of the economic system as a whole

• Government intervention in all economic activities

What is scarcity in economics?

• When wants exceed resources

• When there are no wants

• When resources are unlimited

• When resources exceed wants

What is opportunity cost?

• The best alternative that has to be chosen

• The second best alternative that has to be forgone

• The least preferred alternative

• The most expensive alternative

Which of the following is a basic economic problem?

• How to eliminate scarcity

• How to distribute income equally

• What to produce, how to produce, for whom to produce

• How to produce luxury goods

What are the factors of production?

• Income, Savings, Investment, Consumption

• Supply, Demand, Price, Quantity

• Entrepreneur, Capital, Land, Labor

• Money, Goods, Services, Technology

Which economic system involves public ownership of resources and central planning authority?

• Mixed Economy

• Islamic Economy

• Capitalism

• Socialism

What is a characteristic of a mixed economy?

• Co-operation between government, public, and business sectors

• Only public ownership of resources

• Government control of monopolies

• No government intervention in the economy

In which economic system is there a prohibition of interest and distribution of wealth?

• Capitalism

• Mixed Economy

• Islamic Economy

• Socialism

What is the main disadvantage of capitalism?

• Equal distribution of income and wealth

• Lack of social welfare

• Rapid economic development

• No serious unemployment or inflation